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Coverdell Education Savings Accounts allow individuals to invest funds for educational purposes.
Formerly known as an Education IRA, this trust or custodial account is created for the purpose of paying qualified education expenses of the designated beneficiary.
Contributions to a Coverdell ESA are not deductible, but all distributions are tax-free if they are used for qualified education expenses at an eligible institution.
Education savings accounts can be applied to qualified elementary, secondary, and higher education expenses.
A CESA can be opened for a beneficiary who is under the age of 18 or for someone with special needs. For 2021/2022, the maximum contribution to a Coverdell ESA is $2,000 per year.
Unlike other savings plans that require earned income, you don’t need income to open a CESA.
However, if you do have earned income you must fall within certain modified adjusted gross income limits (MAGI). Your MAGI for the year that you open the account must be less than $95,000-$110,000 ($190,000-$220,000 for a joint return).
2021/2022 CESA Contribution Limits
|Coverdell Educational Savings Account (CESA) Contribution Limits|
|Standard Limit (Up to Age 18)||Modified AGI Limits to Qualify for Account|
|$2,000||Single: $95,000 – $110,000
Married Filing Joint: $190,000 – $220,000
|2021 CESA Contribution Deadline is 4/15/2022.
2022 CESA Contribution Deadline is 4/15/2023.
For more CESA information see IRA Publication 969.
What is a Coverdell Education Savings Account (CESA)?
How does a self-directed Coverdell ESA work?
Are contributions to a Coverdell Education Savings Account tax deductible?
What are the CESA contribution limits?
Are there income limits associated with Coverdell Education Savings Accounts?
What’s the difference between a 529 plan and a Coverdell Education Savings account?
How do you open a Coverdell Education Savings Account?
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